Lithuanian lawyers see appeal against fine on railway co possible

2017-10-03

LETA/TBT Staff

VILNIUS – Lawyers say that the Lithuanian government should give serious thought to the possibility of filing an appeal against the European Commission's (EC) fine against the state-run company Lietuvos Gelezinkeliai (Lithuanian Railways, LG), however, admit that the available information does not give reasons to strongly expect a successful outcome.

Lithuania's aspirations to go to court may be spurred by potential claims from the Latvian railway company or Orlen Lietuva, if the competition breach is not contested. A marathon of court hearings could also put off the payment of the fine.

Lithuania has 70 days to decide on an appeal.

Daivis Svirinas, partner at Sorainen law office, told BNS that the state-run company should use "every possibility, if there are any and are visible, before giving up."

"In my opinion, there are possibilities (to appeal) but to give a more detailed answer I would need to know all the material and the reasoning behind the commission's ruling. The main dispute is about whether the railway stretch was dismantled to impede traffic on the track or whether there were other technical reasons," Svirinas said on Tuesday.

His opinion was seconded by Andrius Ivanauskas, partner at Glimstedt law office – in his words, the commission's argumentation should be checked in court.

“We know quite a lot about the situation and there is substantial data against Lietuvos Gelezinkeliai. Of course, we should look at the factual reasoning and the legal content of the European Commission. In any case, the commission's vision should be checked in court to see whether everything was done correctly and whether there were procedural breaches,” Ivanauskas told BNS.

Concerns about Poles and Latvians

The lawyers emphasized that the litigation could be important not only for the 28-million-euro fine but also the potential future claims. Enforcement of the EC ruling would pave way for Orlen, a Polish concern that operates Lithuania's Mazeikiai oil refinery and Butinge terminal, and Latvia's railway company to demand compensation of the damage they incurred.

"If we see clear possibilities and a successful outcome of the dispute, an appeal against the European Commission's finding would be one of the rational solutions, as it could settle the issue of the fine and prevent future claims on compensation of damages," said Svirinas.

The EC found that the dismantled railway stretch forced Poland's Orlen to deliver freight to Latvia on a far longer route.

Latvia's railway company has already confirmed it was discussing a compensation claim over railway maintenance and unreceived income. Poland's Orlen has not yet been available for a comment on the Brussels' decision.

"If you lose an EC case and do not defend against the violation in court, there is a presumption that you caused the damage and the only thing left to do is calculate the damages. As we have a clear affected party (Orlen Lietuva) or even a few of them (Latvian railways), this is the reason we should contest the decision," said Ivanauskas.

What Does a Long Investigation Mean?

Lawyers have different interpretations of a lengthy duration of an investigation. After receipt of the Orlen claim, the European Commission conducted checks at the premises of Lietuvos Gelezinkeliai in 2011 and officially initiated the procedure of probing a violation of anti-monopoly rules in March of 2013. In January of 2015, the EC sent a statement of objections.

In Svirinas' opinion, the lengthy scrutiny may indicate that Brussels' officials were not certain of their position.

Nevertheless, Marius Juonys, partner at Ellex Valiunas law office, holds an opposite opinion, saying that long duration of writing conclusions means that "the EC probably repeatedly weighed all pros and cons before making the decision."

In his opinion, the statistical probability of rebutting the European Commission's decision was slim, and Lithuania should not only focus on the fine but also on strategic decisions, including the efforts of making the railway sector more transparent and efficient.

Lithuania's Prime Minister Saulius Skvernelis and Transport and Communication Minister Rokas Masiulis said that the country's interests would be defended by legal instruments but refrained from further comments for now. Legal interests of Lietuvos Gelezinkeliai in Brussels are currently represented by Great Britain's law office Linklaters.

The LG claim could be heard in EU courts of two instances and the proceedings could take a few years. The government's officials have not yet estimated the cost of the litigation, as the country has no experience with similar competition cases in EU courts.

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